LTA & HRA Exemptions

INCOME TAX: EXPLAINED – HOW YOU CAN BENEFIT FROM LTA & HRA TAX EXEMPTIONS Salaried employees can avail the benefit of various tax exemptions with respect to allowances such as house rent allowance (HRA), gratuity allowance, leave encashment, conveyance/transport allowance, leave travel allowance (LTA) and many others given by their employers during their tenure of service. Leave Travel Allowance Section 10(5) of the Income-Tax Act, 1961, read with Rule 2B, provides for the exemption and outlines the conditions subject to which LTA is exempt. LTA exemption can be claimed where the employer provides LTA to employee for leave to any place in India taken by the employee and their family. Such exemption is limited to the extent of actual travel costs incurred by the employee. Travel has to be undertaken within India and overseas destinations are not covered for exemption. For example, where an employer provides LTA of Rs 35,000, but an employee spends only Rs 30,000 on the travel cost, then the exemption is limited to only Rs 30,000. Travel cost means the cost of travel and does not include any other expenses such as food, hotel stay, etc. The meaning of ‘family’ for the purposes of exemption includes spouse and children and parents, brothers and sisters who are wholly or mainly dependent on you. An individual would not be able to claim the exemption in relation to his parents, brother or sisters unless they are wholly or mainly dependent on the individual. Further, exemption is not available for more than two children of an individual born after October 1, 1998. This restriction does not apply in respect of children born before this date, and also in cases where one, after having one child, begets multiple children (twins, triplets, quadruplets, etc.,) on the second occasion. The LTA rules provide for a tax exemption only in respect of two journeys performed in a block of four calendar years. The current block runs from 2018-2021. If an individual does not use her exemption during any block on any one or on both occasions, exemption can be carried over to the next block and used in the calendar year immediately following that block. The individual needs to submit proof of travel to his employer and also keep copies for his own records. Proof of travel could be tickets, boarding passes, invoice of travel agent, duty slip, etc . Read more at http://starhealthdevarajan.com/news/545 For Insurance, Mutual fund Related Services, U can always call 98401 77017 Devarajan www.licdevarajan.com